Value Chain Analysis

Do you want to innovate with your service or process? Here is an effective method which I use on innovation workshops. It involves analysing and questioning every stage of your procedure. Start by breaking the customer journey down into separate stages starting with when the client first encounters you or your brand through to them completing the transaction and any follow-up steps. Draw this as a block diagram and include as many steps as you can, both internal and external.

Now for each stage ask the following five questions in depth:

1. What is the purpose of this step?
2. What difficulties are experienced here? (By customers or by our people)
3. How could we add more value at this stage?
4. What could we do differently?
5. Could we eliminate, minimize or combine this step?

This is best done as a facilitated brainstorm with a diverse team including if possible one or two customers.

Do not skip the first question even if the answer seems obvious. There are always alternative ways to provide the fundamental purpose of the step. So it is important to agree what is the rationale and what is the prime added value for doing what you are doing. Who benefits from this step and in what way?

The second question is an exploration of the problems and issues that surround the process. List as many as you can. This includes cost, time delays and resource issues. The next three questions should be conducted in a very open-minded way with a large number of possible suggestions being listed and explored.

Select the best ideas based on agreed criteria – for example:

• Added Value for the Customer
• Added Value for the Company
• Feasibility

You are looking for something which is novel and a real win/win. A good example of this kind of process innovation is online check-in in the airline business. Previously you had to stand in a long line in order to check-in. Now you can use the internet at your home or office to check-in for your flight. There is added value for the passenger and the airline. Both parties save time. The first airlines to do this gained competitive advantage – now all airlines have to offer it.

Examine your value chain carefully using this method. It should lead to incremental and radical innovations and should help ensure that you and the customer get more added value from each step.